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Home Insurance is a requirement of every residential mortgage, however having an effective home insurance policy is a good practice for all homeowners. Under the standard Contract of Purchase and Sale, the BUYER is liable for all RISK in the property as a 12:01am on the CLOSING DATE. The take home point here is that your insurance needs to be in place before the CLOSING DATE. It is a common mistake to delay your policy until a later possession/ moving date thinking that you are not responsible until you get the keys.

There are lots of choices when obtaining home insurance, policies vary in terms of the extent and type of coverage that they provide; Your insurance agent is the best person to advise on everything from a limited specified perils, to a broad form, to a comprehensive policy.

At Pihl Law Corporation, our personal injury litigators know that an important part of any policy is the third party liability insurance. In this portion of the policy, the insurer agrees to indemnify the insured owner for any judgments rendered against them for bodily injury or death arising out of their negligence with respect to the maintenance of their property and activities that may occur on their property, provided the acts or omissions do not fall within specific exceptions within the policy. The insurance company also agrees to hire a lawyer to defend the property owner when a lawsuit is brought against them. The insurance company however, only agrees to pay out to the limits of the third party liability insurance.

Most policies typically come with an automatic $1,000,000.00 third party liability limit. In today’s world, this is probably inadequate and often coverage of up to $5,000,000.00 may be available. Imagine if someone tripped on a loose board on your staircase, and fell down, resulting in a head injury. Compensation would include general damages for pain and suffering, but also probably the injured person’s past and future loss of income, costs of care, and out of pocket expenses. The value of these claims can be large (our law firm regularly sees claims well in excess of $2,000,000), and if the insurance limits are insufficient to pay the whole of the claim, the home owner will be required to pay any shortfall out of their own pocket (or may be forced to sell their home to pay for the resulting judgment).

Like this:

In a recent Kelowna court case, Oyelese v. Sorensen, 2013 BCSC 940 (CanLII), has received widespread local media attention as the Sorensens have been ordered by the Court to remove their encroaching swimming pool from their neighbors lands. Like most Real Estate Lawyers, our firm has received lots of questions on this case from local residents and local Realtors.

What Happened?

In 1998, when previous owners installed a chain link fence and based on the incorrect location of the fence, an expensive in ground pool was installed which, unbeknownst to either homeowners crossed over the property line. Mr. Sorensen was unaware of the encroachment when he purchase the home in 2007.

At the time of closing his home purchase, Mr. Sorenson was provided a “survey certificate” with hand draw location of the swimming pool which the previous owners certified as correct. (this is likely the subject of further court action)

In 2009, Mr. Oyelese purchased the neighboring property and discovered the encroachment when planning some landscaping improvements later in the year. Mr. Oyelese refused Mr. Sorensen’s subsequent offers to purchase the encroaching area.

The Law

The Survey Plan registered in the Land Title Office is the definitive property line at law. Section 36 of the Property Law Act does provide the court some flexibility, but its application was limited by the Supreme Court judge in this case.

Importantly for home buyers, the court was quite clear the “no reasonable person” should embark on a major landscaping project without determining the boundary of the property with an official survey.

The Judges Ruling – Ordered the Sorensen’s to remove the pool from the encroachment area within 75 days.

FOR BUYERS – What type of due diligence can be done prior to subject removal?

Buyers can carefully review a subdivision plan showing the dimensions of the lot (Available from the Land Title Office);

Buyers can review RDCO GIS (free search) to see their property lines relative to a satellite image;

Buyers can obtain a consolidated site plan from a BC Land Surveyor; and

Buyers can obtain a home owners title insurance policy;

Note: A home owners title insurance policy will not provide assurance from all encroachment (for example fences are often excluded from coverage).

Cudos: to Jennifer at Coldwell for taking extra time with a client to ensure a client was 100% satisfied with the location of a driveway easement – great work!

My mum’s family is from Edmonton and I had the fortune of going to the University of Alberta in Edmonton for 10 years. Although I enjoyed the great people I met in Alberta, I was always drawn to come back home to Kelowna.

Kelowna Real Estate has a special allure for many Alberta buyers for many good reasons, a few of them include:

Kelowna is a days drive and a very quick flight for most Albertans;

Kelowna has four wonderful seasons with an early spring and a late fall golf season;

Kelowna’s vineyards are the perfect complement to Alberta beef;

Kelowna’s beaches are hot in the summer and our mountains are powdery soft in the winter;

Kelowna’s real estate is an affordable investment in Canadian real estate that Albertans can enjoy year round;

There are are few important differences between BC real estate and AB real estate that most Albertans should know when they are contemplating a quick hop over to Kelowna:

Most of lands in British Columbia are untitled as Crown Lands, where as most Alberta has been surveyed into quarter sections;

Real Property Reports or consolidated survey plans are not commonly done on a residential home purchase;

Property Transfer Tax is payable on almost every home transaction (1% of the first 200k and 2% of the remainder);

Principal residents get a reduction in property taxes, this does not apply to persons who do not reside in BC (or own revenue properties).

Condominiums are called Strata Corporations here and Strata Depreciation Reports are very new to BC law (therefore not many strata corporations have done them yet)

If you are planning on being a residential landlord, BC Residential Tenancy Act is very tenant friendly, and required that Landlords strictly comply with the legislation.

Our land title system has had immediately electronic registration for many years now, and for residential real estate this means files close and money is transferred on the Closing Date with no escrow period.

Recently, a local Realtor and Home Inspector have been in the news as a Buyer has claimed that they have bought an “unlivable” home (full CBC News Story here) and the aggrieved Buyer is claiming against the Realtor and Home Inspector in small claims court. From my reading of the story and documents (as presented by CBC) there are obviously some salient points that have been downplayed or glossed over:

a) The Buyer bought the home “sight unseen”

b) The Home Inspection (as posted by CBC) noted:

Damaged, rotten windows with moisture damage

Old galvanized piping

The house was 80+ years old

The home inspector was unable to access the crawl space

Major cracking in the ceiling

Damaged sinks and freeze vulnerable piping

Missing baseboard heaters

Major electrical issues requiring further inspection

So the question that comes to my legal mind given these facts is “would a reasonable person think they were buying a home without major flaws?”. Obviously there are many more facts to this story which will be uncovered in the course of the court proceedings on this matter.

Whenever I discuss home inspections with Buyers I always stress that home inspections are like going to see a doctor at a walk-in clinic; Home Inspectors are generalists, they have a broad base of knowledge, but they are not specialists. The take home message for Realtors is that if there are “issues” that are discovered in a home inspection, Realtors should ensure that their clients are directed toward professionals (plumbers, engineers, roofers, ect…) who are in the best position to assess the magnitude of the problem and provide a realistic cost of repair.

Irrespective of economic conditions, foreclosure properties are often viewed as a “deal” for the savvy real estate investor. However, courts in British Columbia have a duty to ensure that foreclosure properties are being sold as close to their fair market value as possible. Usually this means ensuring that a property is marketed with a REALTOR on the MLS system. Here are some key points for Home Buyers to remember when they are buying foreclosure properties in Kelowna and other parts of British Columbia:

1. Offer is Subject to Court Approval.

Buying a foreclosure starts much like any other real estate deal, except that often you are negotiating with the Bank, the Bank’s Realtors, and the Bank’s Lawyers. This means that offers must be open for acceptance for longer periods of time to allow the institution’s foreclosure committee time to consider your offer. Unlike a regular real estate deal, just because your offer has been accepted does not mean that “You Have a Deal”.

All deals are subject to court approval. This means that a judge (or master) must approve the terms and conditions which have been agreed to by the bank. The judge will be ensuring that the current home owner has been given proper notice of the proceeding and that they have not “paid out” or redeemed their mortgage prior to the Court Date.

A Buyer should keep in mind that a judge has absolute discretion in her courtroom and success in court can never be guaranteed. The outcome will vary depending on whether the application by the lender for sale of the property is uncontested, contested by the home owner, or if there is multiple offers presented in court.

2. No Other Subject Conditions

The offer which is presented to the Court (and the Lender) must not contain any subject conditions for the benefit of the Buyer. In most real estate transactions, subject conditions allow time for a Buyer to perform due diligence on the property they are purchasing while binding the Seller to the deal (for example: obtain a home inspection). In a traditional real estate deal, if an issue is discovered (ie; a leaking roof) after the deal signed but prior to subject removal, the Buyer will have an opportunity to re-negotiate with the Seller and will not be legally obligated to complete in the face of the new information.

In foreclosure transactions, the Buyer must do all due diligence prior to knowing if their offer will be acceptable to the bank or the court. This means that a Buyer is faced with a dilemma: a) potentially spend thousands of dollars on home inspection costs, appraisal fees, and other consultants only to have the property purchased by another party on court day; or b) buy an “as-is” property without proper due diligence which may have many costly unforeseen complications.

Financing is one area in foreclosure transactions that cannot be overlooked. Once the court approves the offer, the Buyer is legally obligated to complete the transaction and pay the Purchase Price. Buyers must ensure that their mortgage brokers have received an unconditional approval from their lender prior to proceeding to Court.

3. Property Purchased “As-Is”

In a standard residential real estate transaction, the Seller provides a Property Disclosure Statement which provides the Buyer with a modest amount of disclosure on the condition of the premises.

One of the key differences between a foreclosure purchase and most residential real estate transactions is that the Buyer is purchasing the property “As-Is”. In a foreclosure, the seller (Lender) explicitly is making no representations or warranties about the Property and there is no Property Disclosure Statement which is provided (or it is simply blank).

When a Buyer is purchasing a property in “As-Is” condition, the onus is on the Buyer (caveat emptor) to ensure that the property meets the Buyer’s needs. Commonly foreclosure properties have issues including: non-compliance with bylaws, illegal activity, squatters, no occupancy certificates, unhealthy conditions (mold), and very poor maintenance.

The Buyer needs to understand that the condition of the premises may change dramatically between the date of viewing to the date of possession. The Buyer is inheriting all these potential issues, “warts and all”.

4. Be prepared for Court

Once a Buyer’s initial offer is accepted, the Lender’s lawyers will set down a date in Court for approval of the offer. This initial offer becomes part of the public court filing and other parties may show up in court to present better offers. The Lender’s sole responsibility is to set the date for the chambers hearing, if the initial Buyer wishes to have the option of revising their offer in Court (usually in the face of competing offers) they (together with their agent) should attend in chambers on the date. Buyers are well advised to have their “BEST OFFER” ready on the court date (with an appropriate deposit in the form of a Bank Draft) if there are competing offers.

It is important that any offer presented to the court should contain the correct information as the court will rely on the offer to draft the Order Approving Sale which will be filed in the Land Title Office by the lawyers for the successful Buyer. Care should be taken to ensure: Correct Legal Names of Purchasers; Correct Legal Description of All Property; and Correct Description of Property Interest Acquired (i.e.; Leasehold v. Freehold)

5. Closing and Possession Issues

Once you are successful in Court and the Court has granted you, as Buyer, an Order Approving Sale, there are still a number of potential complications. At this stage it is important that you are using the services of a Real Estate Lawyer familiar with closing of distressed and foreclosure properties. Obtaining title to your new home is much different in the case of foreclosure property as there is no transfer filed in the Land Title Office and instead the actual Order Approving Sale is reviewed and approved by a Land Title Examiner. If there have been any mistakes in drafting of the order by the Lender’s counsel, the order may be defected by the Land Title Office and the Lender’s counsel only obligation will be to correct the order.

Possession of a foreclosed property is not guaranteed on the Closing Date. A tenant, squatters, or the former owner may be present on the property. In this case the bank is only required to use reasonable efforts to obtain another court order (writ of possession) ordering the property be vacated. This process can take additional time. A Buyer should not rely on timely possession of foreclosure property.

6. Liability Issues

In summary, Buyers assume a number of additional liabilities when foreclosure property is purchased, including:

a) Property Damage

b) Property Non-compliance with law and by-laws

c) Illegal Activity

d) Adverse Possession of Premises

e) Potential Tax Liability (GST and Non-Resident Withholdings)

f) Potential Strata Assessment Liabilities

Foreclosure property purchases can represent a good deal for many savy and experienced property investors however, Buyers should carefully enter into these arrangements fully educated on the risks of purchasing foreclosure property.

This paper is based on the lecture provided to at the Okanagan Mainline Real Estate Board annual general meeting on March 6, 2013.

“Can I bring my (dogs/cats/lizards/emus) to my new home.” is a phone call I get on a weekly basis by Purchasers who want to ensure the furry, fuzzy, and scaly members of their family are welcome in their new home.

Generally there are three sources of law that can impose limitations on the right of a home owner to have domestic pets at their premises. Owners who want to ensure that their pet is permitted in the new home should check the following:

City of Kelowna Zoning and Local Government Bylaws

Statutory Building Schemes and Restrictive Covenants

Strata Bylaws

Local Government Bylaws

The Regional District of Central Okanagan administers dog control and barking bylaws within most areas of the Central Okanagan (RDCO dog control information here). Dog Control Bylaw No.366 limits to a maximum of only 2 dogs allowed per premises, a special kennel license is required for three or more dogs (note: a dog kennel (3 or more dogs) may also require a business license and property zoning must be sufficient – see City of Kelowna Zoning Information here) .

Statutory Building Schemes and Covenants

Statutory Building Scheme and Covenants are land title charges which limit an owners use of the property. Some of these charges will common place limits on the the pets that can be kept on the property. For example most older residential building scheme (common found in Kelowna properties built in the 1970s and 1980s in Glenrosa and Rutland) state that “no more than 2 domestic dogs or cats and no horses, cattle, swine, sheep, or other livestock can be situated on the property”. It is advisable to discuss these matter with your real estate lawyer who can review your land title with you.

Strata Rules and Bylaws on Pets

Buyers with pets who are considering buying into a strata corporation, should ensure they are intimately familiar with the strata rules and bylaws which may limit a Buyer’s ability to keep a pet. Buyers should review these documents carefully as these documents not usually reviewed by lawyers or Realtor (unless they are specifically engaged to).

If a Strata Corporation is using the standard bylaws (and has not amended them), a strata owner must not keep any pets on a strata lot other than one or more of the following:

a reasonable number of fish or other small aquarium animals;

a reasonable number of small caged mammals;

up to two caged birds;

one dog or one cat

Strata Corporations can amend these standard bylaws and can restrict: the number of pets, the type, kind, breed or weight of pets, or require the pet to be registered with the Strata Corporation. The pets which exist at the time the bylaw is passed may continue to live in that strata unit until the pet’s death (they are grandfathered under the old rules).

When Homes Buyers enter a show suite for the first time, it can look very impressive and they are often shown marketing materials which can include the layout of some of the units and the amenities which will be present once the development is built. Often a contract is signed and a deposit is made before Buyers have had a chance to fully contemplate their decision.

By law in British Columbia, Purchasers of new development property have a 7 day rescission period to cancel their purchase agreement and have their deposit returned without penalty.

During this 7 day period purchasers should thoughtfully and carefully review their disclosure statement to ensure that the development property meets their expectations.

In British Columbia, all new developments which are comprised of five or more units are subject to the Real Estate Development and Marketing Act which governs how a developer can market and sell or lease these development properties. The Act is consumer protection legislation which facilitates disclosure about the development by requiring the Developer to provide a Disclosure Statement to the Buyer which discloses the following:
a) The Background and Experience of the Developer
b) The Purchaser’s Rights of Rescission
c) Permitted Uses of the Development
d) Phasing of the Development
e) Strata Information and Budgets
f) Parking Entitlements
g) Utilities and Services
h) Description of the Land Title
i) Construction and Warranties
j) Local Government Approvals and Finances
k) Handling of Purchaser’s Deposits

It is important that the Buyer’s ensure that their timeline and their intended use of the Property align with the Developer’s disclosure. Buyers should not simply rely on the verbal assertions of sale persons as Developer’s contracts will expressly state that only those representations and warranties made in writing in the contract are binding between the parties.

After a Buyer has had a chance to review the Disclosure Statement on their own, I often find that reviewing the following questions assists most Buyers in their thought processes:

1) Do you have any reservations that the Developer will not complete this project?
2) Is your quality of life going to be impacted if the project is delayed?
3) Why did you purchaser this unit, what made it special?
4) Was there any assurances that you were given by the sale centre staff which prompted you to purchase this unit?
5) If the project does not proceed, how will your life be impacted?
6) Are you aware of the Developer’s termination rights in the contract?
7) Are you aware of the limitations on assignment or covenants respecting the re-marketing of product after it has been purchased?
8) If a part of the project (or amenities) are phased, how will your perceived value of the unit be altered if subsequent phases do not proceed?

In short, a Developer’s Disclosure Statement is very much like a “specifications sheet” and are legally binding representations of the Developer about the nature of the property that you are intending to purchase.